With the growth of all-electric vehicle sales slower than anticipated, big automakers are finding more and more ways to satisfy their customers halfway.

In an effort to meet consumer demand and avoid expensive fines associated with federal fuel economy and emissions regulations, an increasing number of manufacturers are reevaluating the practicality of producing hybrid automobiles and trucks.

The evolving tactics contradict the industry-wide electric vehicle (EV) rhetoric over the past few years. The Biden administration has pushed to increase the number of EVs on American roads as soon as possible, and numerous automakers have started to invest billions of dollars in all-electric vehicles.

However, hybrid cars, which mix conventional internal combustion engines with electric vehicle battery technologies, have the potential to assist the automotive sector in reducing short-term consumption of fuel and pollution while easing people into electric vehicles.

According to Edmunds, sales of conventional hybrid electric vehicles, or HEVs, like the Toyota Prius, will surpass sales of all-electric vehicles in 2023. Up until November of this year, 1.2 million cars, or 8.3% of all cars sold in the United States, were hybrid electric vehicles. Compared to the overall sales of the previous year, that share has increased by 2.8 percentage points.

As of December, EV sales accounted for 6.9% of total sales, or about 976,560 units, an increase of 1.7 percentage points over the same period last year. Up until November, under 1% of all automobile sales in the United States were plug-in hybrid electric vehicles, or PHEVs.

“There’s been so much talk over the past few years about the move toward electrification and sort of forgoing hybrids, but … hybrids are not dead,” said Jessica Caldwell, Edmunds executive director of insights. “There’s a lot of consumers out there that are interested in electrification, maybe not ready to go fully electric.”

In addition to being less expensive, hybrids help allay a number of EV-related worries, such range anxiety and a lack of infrastructure for charging. This year’s average hybrid, according to Edmunds, cost $42,381. This is less than the typical EV price of $59,400, PHEV price of $60,700, and standard car price of $44,800.

Nine out of ten hybrid sales in the United States are attributed to Toyota, Honda, and Hyundai Motors, which includes Kia, according to Morgan Stanley earlier this month. The automakers’ representatives stated that they are making a concerted effort to boost hybrid car sales and manufacturing in the United States.

“While the transition to full battery electric transportation will take time, hybrids and plug-in hybrids will play an equally important role in Kia America’s near and mid-term goals,” Eric Watson, vice president of Kia America sales, said in a statement to CNBC.

And more businesses are doing the same, like the Detroit automakers.

Although it still sells PHEVs, Ford Motor is shifting its focus towards HEVs. In September, the company announced that it will double the V-6 hybrid model’s sales to almost 20% of the US market by the 2024 model year. Jim Farley, the CEO of Ford, intends to increase the company’s output of gas-electric hybrids by four times.

Compared to the same period in 2022, Ford’s hybrid sales through November of this year were up 23% to over 121,000 vehicles, or 6.8% of the company’s total sales up to that point. Ford’s electric vehicle sales, on the other hand, have increased 16.2% to approximately 62,500 units, or 3.5% of its overall sales.

Plug-in hybrids and hybrids both use EV technologies in addition to a conventional engine. Conventional hybrids, like the Toyota Prius, have electrified components, including a small battery, to help the engine achieve greater fuel economy. When driving entirely on electricity for a certain distance before an engine is required to power the vehicle or electric motors, plug-in hybrid electric vehicles (PHEVs) usually have larger batteries.

For its part, Chrysler parent Stellantis is waiting to introduce a variety of EVs until the next year, instead of relying solely on PHEVs as part of its electrification strategy. Leading the way in the United States in terms of plug-in hybrid electric vehicle sales, the company’s third-quarter sales were made up primarily of SUVs, namely Jeep Wrangler and Grand Cherokee models.

However, General Motors isn’t quite ready to change its EV goals just yet. One of those objectives is to provide just all-electric cars by 2035.

With the Chevrolet Volt, GM set the standard for plug-in electric cars in the 2010s. Early in 2019, the car’s manufacturer discontinued it, citing issues with demand and cost.

Other than the recently released Chevrolet Corvette E-Ray, a hybrid variant of the renowned sports car, the carmaker has not marketed another hybrid vehicle in the United States since that time. In China, GM does sell hybrid vehicles, including PHEVs.

“We still have a plan in place that allows us to be all light-duty vehicles EV by 2035,” GM CEO Mary Barra said Monday during an Automotive Press Association meeting in Detroit. “We’ll adjust based on where the customer is and where demand is. It’s not going to be ‘if we build it they will come.’ We’re going to be led by the customer.”

Her remarks follow GM President Mark Reuss’s August declaration that he was “flexible” with regard to hybrid vehicles in order to comply with federal requirements.

“If it means we have to do that by law, then we have to do that by law,” he said. “If there’s regulations that get dealt on us, then we’re going to look at everything in our toolbox to meet them.”

Large automakers, notably the Detroit automakers, relied on EVs to help balance the emissions and poor fuel efficiency of larger SUVs and trucks, which might result in fines from the federal government amounting to hundreds of millions of dollars.

The National Highway Traffic Safety Administration said in June that GM and Stellantis were ordered to pay a total of $363.8 million in fines for their prior years’ automobiles and trucks’ failure to fulfil federal fuel-economy criteria.

Automaker lobbying groups claim that under the present recommendations by the Biden administration to raise vehicle fuel efficiency and shift to electric vehicles, such fines will grow dramatically.

Earlier this year, the Detroit Three’s lobbying group, the American Automotive Policy Council, warned that unless their fleets’ total fuel economy was significantly improved, the automakers will be hit with more than $14 billion in noncompliance penalties between 2027 and 2032. According to Reuters, American manufacturers have independently warned that GM will have to pay $6.5 billion in fines, Stellantis $3 billion, and Ford $1 billion.

In order to achieve a fleetwide average fuel efficiency of 58 mpg, the NHTSA proposed in July raising fuel efficiency criteria by 2% year for passenger vehicles and 4% annually for pickup trucks and SUVs between 2027 and 2032.

Hybrids could save automakers millions, as EVs aren’t as important in increasing those fleetwide averages as initially thought.

“Even without electric vehicles, there’s an expectation that electrification of an internal combustion engine is going to be necessary to meet regulations anyway,” said Stephanie Brinley, principal automotive analyst at S&P Global Mobility.

For Toyota, the revival of hybrid vehicles is particularly significant. With the Prius, the biggest carmaker in the world is credited with creating the first conventional hybrid.

Ironically, the firm was targeted by environmental organisations last year for its hybrid, plug-in hybrid electric vehicle (PHEV) and electric vehicle (EV) mix strategy. Critics saw this as a sign of the corporation’s lack of commitment to an all-electric future.

Toyota maintained at the time and continues to do so that it is satisfying customer demand and preparing for a more gradual worldwide adoption, which would inevitably result in certain markets adopting EVs earlier than others.

The company goes on to say that it considers the total environmental impact of producing electric vehicles (EVs) in comparison to hybrid vehicles. It claims that it can save up to eight times the amount of carbon emissions into the atmosphere by producing eight 40-mile plug-in hybrids for every one 320-mile battery electric vehicle.

“People are finally seeing reality,” Toyota Chairman and former CEO Akio Toyoda, who has been heavily criticized for the slower approach on EVs, said in October regarding EVs, according to The Wall Street Journal.

(Adapted from CNBC.com)